Monday, September 24, 2018

S-400 Deal: Can India Wriggle Out of Looming CAATSA Sanctions?

S-400 Deal: Can India Wriggle Out of Looming CAATSA Sanctions?

New Delhi: Around the time when '2+2' dialogue was being held in New Delhi, India was a hopeful that the US may grant waiver from the Countering America's Adversaries Through Sanctions Act (CAATSA) sanction over the purchase of S-400 Triumf missile air defence systems from Russia.

Reports had then suggested that US Secretary of Defence James Mattis was a strong proponent of granting waivers to India. But, the recent developments have once again forced India to wonder if it can really be hopeful about the waiver.

Last week, the US imposed sanctions on a Chinese entity, the Equipment Development Department and its director Li Shangfu for its recent purchase of Russian Sukhoi Su-35 fighter jets and S-400 surface-to-air missile.

Trump on Thursday (Sep 20) signed an executive order, paving the way for slapping crippling sanctions on countries and foreign entities and individuals violating the Countering America's Adversaries Through Sanctions Act (CAATSA).

The fact that the US has now imposed fresh sanctions against China for purchasing fighter jets from Russia, makes a similar threat real for India. This also casts a dark shadow over Russian president Vladimir Putin's India visit on 5 October for the 19th India-Russian Summit, when the S-400 Triumf deal was also expected to be possibly inked. But the S-400 is not the only issue connected with US waivers under CAATSA.

The government recently cleared a $2.2-billion deal for four advanced Talwar-class stealth frigates with Russia; two sets to be built in Goa and balance two be bought directly from Russia. Other deals include licensed-production of the AK-103 assault rifles under 'Make in India', joint production of the Ka-226 light utility helicopters, two IL-78 transport aircraft as airborne early warning and control (AEWC) and 48 Mi-17 helicopters.

Despite threat of sanctions by the United States, India has made it clear that it would go ahead with the purchase of S-400 Triumf air defence missile systems from Russia.

What Exactly Is CAATSA?

The US has imposed military sanctions against Russia under stringent CAATSA (Countering America's Adversaries Through Sanctions Act). This also extends to countries that engage with Russia in defence matters. US' stand effectively means that any country that engages in defence or intelligence sharing with Russia could also be subject to sanctions.

On one hand India wants these missiles to strengthen defence capabilities, but at the same time does not want to sour relations with the US. India would hope that the Trump administration grants exemption to India under CAATSA. The waiver that India may seek will not be an easy decision for the Trump administration to make because of certain sections in the CAATSA legislation.

Section 231 the CAATSA legislation requires that the president impose sanctions on any entity that "engages in a significant transaction with the defence or intelligence sectors of the Government of the Russian Federation". With the value of the S-400 deal being almost Rs 40,000 crore, it definitely falls under 'significant transaction' mentioned in CAATSA.